FTCtelemarketers who use predictive dialers to obtain, install, and test the necessary hardware or...

Federal Communications Commission FCC 03-153

increasing productivity and lowering costs for telemarketers and, ultimately, for consumers.5L6 Some industry members oppose restrictions on the use of predictive dialers, maintaining that the industry has “natural incentives” to keep abandonment rates low to avoid alienating consumer^.'^' Others contend that a set rate would not account for the needs of various telemarketing campaigns.’’* While many telemarketers maintain that a maximum abandonment rate would eliminate the benefits that result from the use of predictive dialers,’I9 most would nevertheless support a call abandonment rate of 5 per~ent.”~ A few commenters, including the DMA, would not oppose a 3 percent maximum rate.’” One industry commenter, who supported a set abandonment rate on predictive dialers, stated that if non-telemarketing entities continue to dial without restriction, consumers will be encouraged to join do-not-call lists?”

149. In its telemarketing proceeding, the ITC determined that a total ban on abandoned calls would amount to a ban on predictive dialers, and would not strike the proper balance between addressing an abusive practice and allowing for a technology that reduces costs for telemarketers.”’ The FTC’s amended Rule prohibits abandoned but provides in a “safe harbor” that a seller or telemarketer will not be deemed to have violated the TSR if the seller or telemarketer can show that its conduct conforms to certain specified standards, including a call abandonment rate of no more than three (3) percent, measured on a per day per campaign basis.’=

’I6 Pacesetter Comments at 5 ; Teleperformance Comments at 2; ATA Comments at 109; MBNA Comments at 7; NAA Comments at 15-16; Allstate Commenls at 2.

’I’ ATA Comments at 109

SER Comments at 2; MPA Comments at 2 1 518

’I9 SBC Reply Comments at 4; Sytel Reply Comments at 4; DMA Reply Comments at 19

’’O Cendant Comments at 3; CBA Comments at 8; Bank of America Comments at 5; ABA Comments at 3; DialAmerica Comments at IO; ITC Further Comments at 4.

Sytel Comments at 1; DMA Comments at 3 I ; Nextel Further Comments at I I (stating that any Commission regulation of call abandonment rates should be no more restrictive than the maximum three percent rate established by the FK):

Sytel Reply Comments at 2.4. 522

’*’ See FTC Order. 68 Fed. Reg. at 4642. The FTC found that a three (3) percent abandonment rate was “feasible, realistic” and “fully capable” of being achieved. Id. at 4643. See also FTC Further Comments at 33-38.

’ ~ 4 Section 310.4(b)(l)(iv) of the amended TSR defines a prohibited abandoned outbound call as one in which the recipient of the call answers the call, and the telemarketer does not connect the call to a sales representative within two seconds of the person’s completed greeting. FTC Order, 68 Fed. Reg. at 4642. The FTC notes that this definition of abandoned call covers “dead air” and “hang-up” calls, in which the telemarketer hangs up on a called consumer without connecting that consumer to a sales representative. Id.

”’Under FTC Rule 310.4(b)(4), a seller or telemarketer will not be liable for violating 310.4(b)(l)(iv) iR(i) the seller or telemarketer employs technology that ensures abandonment of no more than three (3) percent of all calls answered by a person, measured per day per calling campaign; (ii) the seller or telemarketer. for each telemarketing call placed, allows the telephone to ring for at least fifteen (15) seconds or four (4) rings before disconnecting an unanswered call; (iii) whenever a sales representative is not available to speak with the person (continued .... )

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Federal Conununications Commission FCC 03-153

B. Discussion

150. Given the arguments raised on both sides of this issue as well as the FTC’s approach to the problem, the Commission has determined to adopt a rule to reduce the number of abandoned calls consumers receive.526 Under the new rules, telemarketers must ensure that any technology used to dial telephone numbers abandons no more than three (3) percent of calls answered by a person, measured over a 30-day period. A call will be considered abandoned if it is not transferred to a live sales agent within two (2) seconds of the recipient’s completed greeting. When a call is abandoned within the three (3) percent maximum allowed, a telemarketer must deliver a prerecorded identification message containing only the telemarketer’s name, telephone number, and notification that the call is for “telemarketing purposes.” To allow time for a consumer to answer the phone, the telemarketer must allow the phone to ring for fifteen seconds or four rings before disconnecting any unanswered call. Finally, telemarketers using predictive dialers must maintain records that provide clear and convincing evidence that the dialers used comply with the three (3) percent call abandonment rate, “ring time” and two- second-transfer rule.

1. Maximum Rate on Abandoned Calls

151. The Commission believes that establishing a maximum call abandonment rate is the best option to reduce effectively the number of hang-ups and “dead air” calls consumers experience. We recognize that industry generally advocates a five percent abandonment rate, claiming that a rate lower than five percent would reduce efficiencies the technology provides.5z7 However, the Commission is not convinced that a five percent rate will lead to a reasonable reduction in the number of abandoned calls. The DMA’s current guideline, cited by many commenters, calls for an abandonment rate of no higher than five percent?” And several (Continued from previous page) answering the call within two (2) seconds after the person’s completed greeting, the seller or telemarketer promptly plays a recorded message that states the name and telephone number of the seller on whose behalf the call was placed; and (iv) the seller or telemarketer. in accordance with 310.5(b)-(d). retains records establishing compliance with 310.4(b)(4)(i)-(iii). FTC Order, 68 Fed. Reg. at 464345.

The FTC’s rules on call abandonment were to go into effect on March 31,2003. In response to petitions filed by the DMA and ATA, the FTC determined to stay the date by which it would require compliance with the abandoned call rules until October I . 2003. The FI% concluded that “staying these provisions will provide ample time for all telemarketers who use predictive dialers to obtain, install, and test the necessary hardware or software, and should alleviate concerns that predictive dialer manufacturers might not have adequate supplies of the necessary products” by the March 31 deadline. See Letter from Donald S. Clark. Secretary, FTC, to Robert Corn-Revere, Ronald G. London and Paul A. Werner 111, Counsel for the ATA, March 14.2003 (available at chttu://www.ftc.~ov/osJ2003/03/0303 14ataletter.htm). See also Telemorkering Soles Rule (Federal Trade Comm’n, Stay of Compliance Date), 68 Fed. Reg. 16414 (April. 4,2003).

See 2002 Notice, 17 FCC Rcd at 17475-76, para. 26 (seeking comment on what approaches we might take to 526

minimize any harm that results from the use of predictive dialers and on alternative approaches to the problems associated with abandoned calls).

However, some industry commenters indicate that a 3 percent rate still obtains productivity benefits. See, e.g, 527

WorldCom Comments at 44.

See chttD://www.the-dma.orv/euidelinesJdotheriehtthine.~f.>

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telemarketers maintain that they now utilize an abandonment rate of five percent or lower in their calling campaigns.529 Consumers nevertheless report receiving as many as 20 dropped calls per day that interrupt dinners, interfere with home business operations, and sometimes frighten the elderly and parents with young children.530 A rule that is consistent with the FTC’s will effectively create a national standard with which telemarketers must comply and should lead to fewer abandoned calls, while permitting telemarketers to continue to benefit from such technology. It is also responsive to Congress’ mandate in the Do-Not-Call Act to maximize consistency with the FTC’s rules.

152. The three percent abandonment rate will be measured over a 30-day period, a standard supported by several industry commenter~?~’ Industry members maintain that measuring the abandonment rate on a per day basis would severely curtail the efficiencies gained from the use of predictive dialers, and may be overly burdensome to smaller telemarketers. A per day measurement, they argue, would not account for short-term fluctuations in marketing carnpaign~?’~ They further argue that the impact of abandoned calls on consumers depends more on the aggregate number of contacts made by a telemarketer over time and not on the number in any given day.533 The Commission believes that a three (3) percent abandonment rate measured over a 30-day period will ensure that consumers consistently receive fewer disconnected calls, and that telemarketers are permitted to manage their calling campaigns effectively under the new rules on abandoned calls. Although we recognize that this rate of measurement differs from the FTC’s rule, we believe a rate measured over a longer period of time will allow for variations in telemarketing campaigns such as calling times, number of operators available, number of telephone lines used by the call centers, and other similar an abandonment rate measured over a 30-day period will allow telemarketers to more easily comply with the recordkeeping requirements associated with the use of predictive dialer^?'^

The record also suggests that

See, e.g., Sprint Comments at 6 (uses 5%); $MOR Comments at 6 (uses a 1% rate); WorldCom Comments at 529

44 (uses 3-58); see also ATA Reply Comments at 70 (many telemarketers from all industries use a 5% limit on abandoned calls); Technion Comments at 5 (uses 5% abandonment rate).

530 See, e.g., Edwin Bailey Hatbaway Comments; Stewart Abramson Comments at I; Kent Rausch Comments.

Reese Comments at 7; ERA Comments at 16; MPA Comments at 2 0 DMA Reply Comments at 19-20; 531

DialAmerica Reply Comments at 3-4 (noting that California allows compliance with its abandoned call rules over a 30-day period); DialAmerica Further Reply Comments at 5 (stating that it can achieve an average abandonment rate of 5% or less when the measuring period spans a month).

532 WorldCom Reply Comments at 2 0 WorldCom Further Comments at 8 (advocating that the abandonment rate be measured over a six-month period); Teleperformance Further Comments at 4; see also MPA Comments at 21.

See, e.g., Reese Comments at 7; WorldCom Reply Comments at 20 533

534 See ERA Comments at 16; Stonebridge Further Comments at 6 (three percent abandonment rate imposes an unnecessary buiden on telemarketers, which should be alleviated by eliminating any reference to a per-day measure); Teleperformance Further Comments at 3.

535 See WorldCom Reply Comments at 19-20 Reese Comments at 7

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2. Two-Second-Transfer Rule

The record confirms that many consumers are angered by the “dead air” they often 153. face when answering the telephone. Running to the telephone only to be met by silence can be frustrating and even frightening, if the caller cannot be identified?36 To address the problem of “dead.air” produced by dialing technologies, the Commission has determined that a call will be considered abandoned if the telemarketer fails to connect the call to a sales representative within two (2) seconds of the person’s completed g~eeting.5~~ Calls disconnected because they were never answered (within the required 15 seconds or 4 rings) or because they received busy signals will not be considered abandoned?” This requirement is consistent with the FTC’s rule.539

154. Answerinn Machine Detection. Opposition from industry to the two-second- transfer requirement appears to be based largely on its implications for use of Answering Machine Detection (AMD).s” Some industry membcnsxplain that AMD is used by telemarketers to detect answering machines, and thereby avoid leaving messages on them.54’ The ATA and DMA maintain that if telemarketers are required to connect to a sales agent or message within 1-2 seconds, a large percentage of calls reaching answering machines will be transferred to sales agents, thereby reducing the efficiencies gained from According to these commenters, 1-2 seconds is often insufficient for AMD to determine accurately if the call has reached an answering machine.” Other commenters explain that AMD is used instead by

See, e.&, Katherine S. Raulston Comments; Edwin Bailey Hathaway Comments; NAAG Comments at 34. 536

’” See supra discussion on the use of prerecorded messages, paras. 136-144

538 Calls that reach voicemail or an answering machine will not be considered “answered” by the called party. Therefore, a call that is disconnected upon reaching an answering machine will not be considered an abandoned call.

See % C.F.R. 310.4(b)(I)(iv).

See, e+. MBNA Comments at 7-8; ATA at 112. But see Reese Comments at 6 (”Abandons should not be-- defined so as to include any measure of ‘time to transfer,’ as these timings are not available in currently installed dialers.”).

539

L1.-

r( -

Technion Comments at 5

542 ATA Comments at 1 17 (suggesting a 4-second transfer requirement); DMA Reply Comments at 19 (“AMD serves perfectly legitimate business purposes causing negligible harm to consumers, but current technology simply will not ensure that ‘dead air’ lasts less than five seconds.”).

But see Alek Szlam Comments at 5 (stating that “[olne possible solution is to require the threshold in the AMD to be set to em on the side of connecting vs. disconnecting. If the dialer cannot determine within the first second whether it is a live call or answering machine, it will assume that it is a live call and connect it to an agent. On the agent side, when they are passed a call that turns out to be an answering machine, they should have the ability to quickly terminate the call or to push a button to play a message. This approach will reduce the amount of dead air. while not significantly impacting the productivity of the call center agent.”). See also Sytel Comments at 5 (’‘We believexat the loss of productivity (measured in terms of talk~time per agent hour) that results when antwering machin& are connected to agents idcall centers is not significant when set against the improvement in call quality that results from having live calls connected to agents immediately Le. not exposing consumers to ‘dead air’ whilst detection is done by the switch.”).

543

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telemarketers to transmit prerecorded messages to answering machines; in such circumstances, calls that reach live persons are disconnected.w It is unclear from the record how prevalent the use of AMD is in the telemarketing industry. One commenter stated that the elimination of AMD would put “consumer-oriented” telemarketing firms out of business.”’ However, other industry members acknowledge that AMD contributes significantly to the amount of “dead air” consumers experience,% and one large telemarketing firm maintains that AMD should be banned c~mpletely?~’ The Commission believes that the record does not warrant a ban on the use of AMD. Instead, if the AMD technology is deployed in such a way that the delay in transfer time to a sales agent is limited to two seconds, then its continued use should not adversely affect consumers’ privacy interests.’“

3. Prerecorded Message for Identification

As noted above, the FTC’s “safe harbor” provisions require that, when a sales agent is unavailable to speak to a person answering the phone, marketers deliver a prerecorded message that states the name and telephone number of the seller on whose behalf the call was made.”’ The Commission has similarly determined that when a telemarketer abandons a call under the three (3) percent rate allowed, the telemarketer must deliver a prerecorded message containing the name of the business, individual or other entity initiating the call, as well as the telephone number of such business, individual or other entity. The message must also state that the call is for “telemarketing p~rposes.””~ We recognize that many consumers are frustrated with prerecorded messages?” However, the record also reveals that consumers are frightened and angered by “dead air” calls and repeated hang-ups. A prerecorded message, limited to identification information only, should mitigate the harms that result from “dead air,” as

155.

’44 See DialAmerica Comments at IO; ABA Comments at 4; Hershovitz Comments at 9. We reiterate that under the TCPA, it is unlawful to initiate any telephone call to any residential line using a prerecorded message without the prior express of the called party, absent an emergency or an exemption by Commission rule or order. Delivery of a message to an answering machine does not render the call lawful. See 47 U.S.C. 5 227(b)( I)(B).

545 Reese Comments at 9 see also Convergys Comments at 7 (“Elimination of the use of AMD would cause Convergys to re-revaluate its participation in the industry.”)

Sytel Comments at 3-4; Alek Szlam Comments at 4.

’41 DialAmerica Comments at 10.

See Sytel Comments at 3-5. The Commission notes that in addition to requiring the delivery of a prerecorded identification message when a call is abandoned, Commission rules also permit prerecorded messages in limited circumstances, including when a company has an established business relationship with a consumer. See 47 U.S.C. 5 227(b)(l)(B) and 47 C.F.R. § 64.1200(a)(2).

549 See FTC’s amended TSR at 16 C.F.R. 5 310.4(b)(4)(iii); see also FTC Order, 68 Fed. Reg. at 4644.

’” By requiring such notice, we believe consumers will be less likely to return the call simply to. learn the purpose of the call and possibly incur unnecessary charges.

’’I See supra para. 137. See also Wayne G. Strang Further Comments at 5-6

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consumers will know who is calling them?” And, they will more easily be able to make a do- not-call request of a company by calling the number provided in the message. We note that such messages sent in excess of the three (3) percent allowed under the call abandonment rate, will be considered abandoned calls, unless otherwise permitted by our rules. The content of the message must be limited to name and telephone number, along with a notice to the called party that the call is for “telemarketing purposes.” The message may not be used to deliver an unsolicited adverti~ement?~~ We caution that additional information in the prerecorded message constituting an unsolicited advertisement would be a violation of our rules, if not otherwise permitted under 47 C.F.R. 3 64.1200(a)(2).~~~

4. Established Business Relationship

While the TCPA prohibits telephone calls to residential phone lines using an 156. artificial or prerecorded voice to deliver a message without the prior express consent of the called party, the Commission determined that the TCPA permits an exemption for established business relationship calls from the restriction on artificial or prerecorded message calls to residences?” As discussed in detail above, the record reveals that an established business relationship exemption is necessary to allow companies to contact their existing customers.ss6 Companies currently use prerecorded messages, for example, to notify their customers about new calling plans, new mortgage rates, and seasonal services such as chimney sweeping and lawn care?” Therefore, prerecorded messages sent by companies to customers with whom they have an established business relationship will not be considered “abandoned under the revised rules, if they are delivered within two (2) seconds of the person’s completed greeting. Similarly, any messages initiated with the called party’s prior express consent and delivered within two ( 2 ) seconds of the called person’s completed greeting are not “abandoned” calls under the new rules.S58 Such messages must identify the business, individual or entity making the call and contain a telephone number that a consumer may call to request placement on a do-not-call list.

”* See, e.g., NASUCA Further Reply Comments at 8-9 (because the ITC’s identification requirements mitigate the nuisance aspects of abandoned calls, the FCC should make an exception for prerecorded messages that are used to comply with the FTC’s safe harbor provision).

s53 As long as the message is limited to identification information only, it will not be considered an “unsolicited advertisement” under our rules. See FTC Further Comments at 32. Bur see Joe Shields Further Comments at 4-5 (arguing that all prerecorded messages that introduce a business are by definition an advertisement).

See supra discussion on prerecorded messages, paras. 136-144. Contrary lo the claims of some parties, even an incidental reference to a product or service could transform the identification message into a prohibited unsolicited advertisement. See Nextel Further Comments at 14-15

5s5 See 1992 TCPA Order. 7 FCC Rcd at 8770-71, para. 34

’’‘ Bur see FTC Further Comments at 40-41 (‘The FCC may need to eliminate the established business relationship exemption with respect to prerecorded message calls. especially if, as the FTC urges, it includes in its revised TCPA regulations provisions addressing the practice of call abandonment and creating a safe harbor.”)

5%

See, e.g., NAAG Comments at 39; Joe Shields Reply Comments at 6-7. 557

558 See amended 47 C.F.R. 5 64.1200(a)(6)(i).

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We recognize that the established business relationship exception to the prohibition on prerecorded messages conflicts with the FTC’s amended rule?59 However, for the reasons described above, we believe the current exception is necessary to avoid interfering with ongoing business relationships.

5. Ring Duration

The Commission also adopts a requirement that telemarketers allow the phone to ring for 15 seconds or four (4) rings before disconnecting any unanswered call. This standard is consistent with that of the FTC, similar to current DMA guidelines:60 and used by some telemarketers already.”’ One industry commenter asserted that telemarketers often set the predictive dialers to ring for a very short period of time before disconnecting the call; in such cases, the predictive dialer does not record the call as having been abandoned?62 The practice of ringing and then disconnecting the call before the consumer has an opportunity to answer the phone is intrusive of consumer privacy and serves only to increase efficiencies for telemarketers. Moreover, in discussing the interplay between the FTC’s rules with the Commission’s rules, very few commenters opposed the “ring time” requirement adopted by the FTC,563 or raised any particular concerns about how it might work in the TCPA framework. Therefore, given the substantial interest in protecting consumers’ privacy interests, as well as Congress’s direction to maximize consistency with the FTC’s rules, we have determined to adopt the 15 second or four (4) ring requirement.

158.

157.

Finally, consistent with the FTC’s rules, the Commission has determined that telemarketers must maintain records establishing that the technology used to dial numbers complies with the three (3) percent call abandonment rate, “ring time,” and two-second rule on connecting to a live sales agent. Telemarketers must provide such records in order to demonstrate compliance with the call abandonment rules. Only by adopting a recordkeeping requirement will the Commission be able to adequately enforce the rules on the use of predictive dialers.

159. The TCPA seeks primarily to protect subscribers from unrestricted commercial telemarketing calls, and therefore exempts calls or messages by tax-exempt nonprofit organizations from the definition of telephone solicitation.5M Therefore, the Commission has

559 See FTC Further Comments at 40-41 (under the FTC‘s amended rules, such prerecorded messages would be prohibited as abandoned calls).

56a DMA Comments, Exhibit 1 (Guidelines for Ethical Rusiness Practice) at 23

WorldCom Reply Comments at 20-21.

Sytel Comments at 3.

WorldCom indicated that such recommendation should not be implemented. yet stated that its dialers are programmed to disconnect the call if there is no answer after 4 ring cycles, which provides sufficient time for a consumer to reach the phone. See WorldCom Reply Comments at 20-21.

563

See 1992 TCPA Order, 7 FCC Rcd at 8773-74, para. 40

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determined not to extend the call abandonment rules to tax-exempt nonprofit organizations in the absence of further guidance from Congress.565 However, the call abandonment rules will apply to all other companies engaged in telemarketing, and the existence of an established business relationship between the telemarketer and consumer will not be an exception to these rules. For these entities, the call abandonment rules will become effective on October I , 2003. We decline to establish an effective date beyond October 1,2003, which is consistent with the date that telemarketers must comply with the FTC’s call abandonment rules.’” This should permit telemarketers to make any modifications to their autodialing equipment or purchase any new software to enable them to comply with the three (3) percent call abandonment rate, the prerecorded message requirement and the two-second-transfer rule.

XI. WIRELESS TELEPHONE NUMBERS

A. Background

160. In the 2002 Notice, the Commission noted that the TCPA permits the Commission to exempt from the restrictions on autodialer or prerecorded message calls, “calls to a telephone number assigned to a cellular telephone service that are not charged to the called party, subject to such conditions as the Commission may prescribe as necessary in the interest of the privacy rights [the TCPA] is intended to prote~t.”’~’ In the 1992 TCPA Order, the Commission concluded that calls made by cellular curriers to their subscribers for which the subscribers were not charged do not fall within the prohibitions on autodialers or prerecorded message^.'^' We sought comment on the extent to which telemarketing to wireless consumers exists today and if so, the nature and frequency of such ~olicitations?~~ We asked whether there are other types of calls to wireless telephone numbers that are not charged to the called party, and whether such calls also should not fall within the prohibitions on autodialers or prerecorded messages?70 We also sought comment on any developments anticipated in the near future that may affect telemarketing to wireless phone numbers. Specifically, we asked how telemarketers will identify wireless numbers in order to comply with the TCPA when consumers are able to port numbers from their wireline phones to wireless phones?” or receive numbers from a thousands-blo~k~~~

Because this will result in an inconsistency with the FTC’s rules, we will discuss the call abandonment rules in the report due to Congress within 45 days after the promulgation of final rules. See Do-Not-Call Act, Section 4.

See Notices of Er Parte Presenrations from WorldCom to FCC, filed May 23,2003 and June 16.2003 566

(advocating a 9.5-month implementation period for the call abandonment rules).

5b7 2002 Notice, 17 FCC Rcd at 17485, para. 45 (footnote omitted); see oko 47 U.S.C. 5 227(b)(2)(C).

1992 TCPA Order, I FCC Red at 8775, para. 45.

569 2002 Notice. 17 FCC Rcd at 17485, para. 43.

570 2002 Notice, 17 FCC Rcd at 17485, para. 45

Wireless carriers will begin providing local number portability (LNF’) on November 24,2003. LNP “means the 571

ability of users of telaommunications services to retain, at the same location, existing telecommunications numbers without impairment of quality, reliability, or convenience when switching from one telecommunications carrier to another.” 47 U.S.C. 5 153(30). See also 47 C.F.R. g 52.21(k).

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that was part of a central office code previously assigned to a wireline ~ a n i e r . ~ ~ ’ The Commission further sought comment on whether the Commission’s rules should be modified to facilitate telemarketers’ efforts to comply with the TCPA.

161. Local Number Portabilirv and Pooling. The Commission’s local number portability (LNP) decisions date back to 1996, with the Commission granting a number of extensions to the effective date for wireless carriers, providing the industry and other interested parties with extensive advance notice of the impending implementation of wireless LNP. The Commission determined in the Number Portability First Report and Order that LECs and certain CMRS providers operating in the 100 largest MSAs must offer local number portability, according to a phased deployment This requirement was subsequently limited by the Number Portability First Order on Reconsideration, in which the Commission concluded that LECs and covered CMRS providers were required only to deploy LNP within switches for which another carrier has made a specific request for the provision of LNP.s75 CMRS carriers are required to implement LNP on November 24,2003, for switches in the top 100 MSAs requested by February 24, 2003.s76 After November 24,2003, CMRS carriers have 30 to 180 days from the request date to implement number portability for switches in the top 100 MSAs not previously requested and for switches outside the top 100 MSAs.’17

162. In the Numbering Resource Optimization First Report and Order, the Commission established national thousands-block number pooling (pooling) as an LNP-based numbering resource optimization measure designed to help slow the pace of area code and North American Numbering Plan (NANP) exhaust.578 This measure involves breaking up the 10,OOO numbers in an NXX into ten sequential blocks of 1,OOO numbers each, and allocating each thousands-block to a different service provider, and possibly a different switch, within the same

(Continued from previous page) 572Wireless carriers began participating in thousands-block number pooling (pooling) on November 24.2002. Thousands-block number p l i n g is a process by which the 10,ooO numbers in a central oftice code (NXX) are separated into to sequential blocks of 1,OOO numbers each (thousands-blocks), and allocated separately within a rate center. See 47 C.F.R. 5 52.20(a).

2002 Notice, 17 FCC Rcd at 17485-86, para. 46 573

’14 Telephone Number Portability, CC Docket No. 95-1 16, First Report and Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd 8352,8393, para. 77 (1996) (Number Portability First Reporf and Order).

Telephone Number Ponability, CC Docket No. 95-1 16, First Memorandum Opinion and Order on Reconsideration, 12 FCC Rcd 7236,7272-3, paras. 59-60 (1997) (Number Portability Firsr Order on Reconsideration).

5’6 Veriwn Wireless’s Petition for Partial Forbearance from the Commercial Mobile Radio Services Number Ponability Obligation, WT Docket No. 01-184, and Telephone Number Portability, CC Docket No. 95-1 16, Memorandum Opinion and Order, 17 FCC Rcd 14972, 14981. para. 23 affirmed CTIA Y. FCC, No. 02-1264.2003 WL 21293569 (D.C. Cir. June 6,2003).

575

Id. at 14985-86

Numbering Resource Optimization, CC Docket No. 99-200, First Report and Order and Further Notice of Proposed Rulemaking, 15 FCC Rcd 7574 (2000) (Numbering Resource Optimizarion First Report and Order).

577

578

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rate center. The Commission mandated participation in national pooling by all carriers that are required to be LNP-capable, because it believed that LNP capability was required before a carrier could participate in thousands-block number pooling?19 In the Numbering Resource Opfimizufion Four~h Report and Order, the Commission determined that thousands-block number pooling need not be linked to a carrier’s ability to provide LNP because a carrier can participate in pooling once it deploys the location routing number architecture.s80 The Commission, therefore, concluded that all carriers, except those specifically exempted, are required to participate in thousands-block number pooling in accordance with the national rollout

providers.582

163.

regardless of whether they are required to provide LNP, including covered CMRS

Telemurketina to Wireless Numbers. The record suggests that while consumers receive telemarketing calls on their wireless phones, it is not a widespread practice at this time.s83 However, some industry members believe that telemarketing calls to wireless numbers are likely to increase:% particularly as growing numbers of consumers use wireless phones as their primary phones?” One commenter pointed out that the record in this proceeding demonstrates that telemarketers would like to solicit consumers on their wireless phones.s86 Although the record does not reflect the full panoply of methods telemarketers currently use to avoid calling wireless telephone numbers, the record provides a sampling of such methods?87 For example, the Direct

Numbering Resource Optimization. CC Docket No. 99-200, Third Order on Reconsideration in CC Docket No. 519

99-200, Third Further Notice of Proposed Rulemaking in CC Docket No. 99-200. and Second Further Notice of Proposed Rulemaking in CC Docket No. 95-1 16. 17 FCC Rcd 4784 at 4787, para. 9 (2002).

Numbering Resource Optimization Implementation ofthe Local Competition Provisions ofthe Telecommunications Act of 1996, Telephone Number Ponability, CC Docket Nos, 99-200, 96-98. and 95-1 16, Fourth Repon and Order and Fourth Further Notice of Proposed Rulemaking, FCC 03-126 (rel. June 18.2003). para. 11 (Numbering Resource Optimization Fourth Report and Order).

Numbering Resource Optimization Fourth Report and Order. See also Numbering Resource Optimiwtion, CC Docket No. 99-200, Order, 17 FCC Rcd 7347 (2002) (Pooling Rollout Schedule).

582

Ponability Obligarion, WT Docket No. 01-184, and Telephone Number Portability. CC Docket No. 95-1 16, Memorandum Opinion and Order, 17 FCC Rcd 14972, ofinned CTIA v. FCC, No. 02-1264,2003 WL 21293569 (D.C. Cir. June 6.2003).

583 But see April Jordan Comments at I ; Mark A. Hiner Comments at 2; Rhett Riviere Comments (all three of whom received marketing calls on their cell phones); AT&T Wireless Comments at 29 (‘Llittle telemarketing is directed to wireless subscribers. . . [although] such activity likely will increase.”).

See Verizon Wireless Petitionfor Partial Forbearancefrom the Commercial Mobile Radio Services Number

See, e&, CTIA Comments at 5 (“having built it, [they] will come”); AT&T Wireless Comments at 29 (reported receiving some complaints from customers regarding calls to wireless phones).

ARDA Comments at 12; BellSouth Comments at 6-7. But see Nextel Comments at 21-22 (whose report 585

indicates that only 3 percent of wireless service subscribers have used their mobile phones IO displace traditional residential landline service).

AT&T Wireless ~ e p l y Comments at 2 1.

Cingular Wireless Comments at 5; DMA Comments at 35; NeuStar Comments at 2

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Marketing Association’s (DMA) Telephone Preference Service allows consumers to opt-out of national telemarketing lists, allowing consumers to register their wireless phone numbers in order to ensure that they do not receive telemarketing calls on their wireless phones.588 Additionally, the DMA has created the “Wireless Telephone Suppression Service.”589 A number of commenters contended that telemarketing to wireless phones is not a significant problem, indicating that the industries’ voluntary efforts have been s u c c e ~ s f u l . ~ ~ Commenters also state that the wireless and telemarketing industries have been actively working together to ensure that telemarketing does not become a problem for wireless

164. Most consumer groups maintain that all telemarketing calls to wireless numbers should be prohibited, regardless of whether they are made using an autodialer, prerecorded message, or live sales agent?92 The vast majority of consumer advocates contend that telemarketing calls to cell phones are as intrusive of consumers’ privacy interests as calls to landline phones.s93 Some believe they are more so, as consumers cany their cell phones on their persons, to work, and while driving.594 Some also contend the prohibition should apply whether the consumer incurs a per-minute charge or a reduction from a “bucket” of minutes purchased at a fixed rate?95 A few industry commenters agree that wireless subscribers should be protected from telemarketing calls to their wireless numbers.5% Other industry members contend that wireless phones should be treated like wireline phones, in part because of the difficulty in distinguishing between wireline and wireless numbers.597 American General Finance argues that

”’ See cht~:N~~ww.dmaconsumers.or~c~i lo~teleohon~ave> (accessed June 2.2003)

Js9 Cingular Wireless Comments at 5. This service provides a list of 280 million phone numbers that are currently used or have been set aside for CMRS carriers. Id.

American Bankers Association Comments at 5 ; AT&T Wireless Comments at 29; American Teleservices J90

Association Reply at 78; Cingular Wireless Comments at 4; AT&T Wireless Reply at 21. One commenter, however, state that calls to wireless phones are an existing and growing problem. CTIA Comments at 5. See also AT&T Wireless Reply at 21 (“...it is likely that telemarketing to wireless phones will increase...”).

59’ Cingular Wireless Comments at 4-5.

See. e.g., NASUCA Comments at 19 (suggesting that telemarketing calls to wireless phones be prohibited 592

unless expressly authorized by the subscriber); NCL Comments at 6-7; TOPUC Comments at 7; NAAG Comments at 35-36.

See, e.g., 1. Melville Capps Comments; City of New Orleans Comments at 12

See 1. Melville Capps Comments; J. Shaw Comments at 5 ; NCL Comments at 6-7; City of Chicago Comments at 13; NAAG Comments at 35-36; EPIC Comments at 13 ( arguing that many consider their wireless phone more personal than their wireline phone).

595 See NAAG Comments at 35; CTIA Comments at 4-5 (arguing that the depletion of one’s minutes by unwanted telemarketing calls is a cost. Telemarketns have no way of knowing what rate plan a consumer has.).

593

See Sprint Comments at IO; Verizon Wireless Reply Comments at 7 (noting that statutory prohibition on 5%

autodialing and artificial messages to wireless service is absolute).

597 ATA Comments at 126-128; ATA Reply Comments at 77-80; CBA Comments at 9 (arguing that premature amendments to the rules could stifle the evolution of mobile commerce).

99


the incremental cost of receiving a cell phone call is not significantly different from the cost of receiving a non-cellular Some commenters suggest permitting calls to wireless numbers when there is an established business relationship:% when the calls are made for survey research purposes,6M or when consumers have provided their cell phone numbers to the calling entity.60’ The ATA urges the Commission to find that calls to cellular telephones are not “charged to the called party” as contemplated by the TCPA’s restriction on autodialed calls.@’

B. Discussion

1. Telemarketing Calls to Wireless Numbers

165. We affirm that under the TCPA, it is unlawful to make uny cull using an automatic telephone dialing system or an artificial or prerecorded message to any wireless telephone number.M3 Both the statute and our rulesM4 prohibit these calls, with limited exceptions, “to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other common canier service, or any service for which the called party is ~harged.”~’ This encompasses both voice calls and text calls to wireless numbers including, for example, short message service (SMS) calls, provided the call is made to a telephone number assigned to such service.& Congress found that automated or prerecorded telephone calls were a greater nuisance and invasion of privacy than live solicitation calls.607

598 AGF Comments at 2.

See, e.g., AGF Comments at 1.

CMOR Comments at 7 (if calls to cell phones are not permitted, the quality of survey research will be harmed). But see John Shaw Reply Comments at 13 (if survey calls are exempted from the TCPA, many sham surveys could

result as telemarketers try to circumvent the regulations).

@’ HFS Comments at 10; BellSouth Comments at 6-7; Bank of America Comments at 6; AGF Comments at 1.

@* ATA Comments at 130-134. See also HFS Comments at 10 (urging the Commission to permit even those calls to wireless numbers made by autodialers and prerecorded messages).

599

See 47 U.S.C. 5 227(b)(1), which provides that it is “unlawful for any person within the United States to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice. . . to any telephone number assigned to a paging service, cellular telephone service, :;pecialized mobile radio service. or other radio common carrier service, or any service for which the called party,is charged for the call.”

6(IJ 47 C.F.R. 5 64.1200(a)(1)(iii).

60’47 U.S.C. 0 227(b)(I)(A)(iii).

m6 SMS, for example, “provides the ability for users to send and receive text messages to and from mobile handsets with maximum message length ranging from I20 to 500 characters.” Section 6WZfB) offhe Omnibus Budget Reconciliation Act of1993. 17 FCC Rcd 12985,1305 I (2002).

6~3’ TCPA, Section 2(10), reprinred in 7 FCC Rcd at 2744. ‘The TCPA prohibits the initiation of any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party, unless the call is for emergency purposes or is exempted by Commission rule or order. See47 U.S.C. 8 227(b)(l)(B).

100


Moreover, such calls can be costly and inconvenient.608 The Commission has long recognized, and the record in this proceeding supports the same conclusion, that wireless customers are charged for incoming calls whether they pay in advance or after the minutes are used.m Wireless subscribers who purchase a large “bucket” of minutes at a fixed rate nevertheless are charged for those minutes, and for any minutes that exceed the “bucket” allowance. This “bucket” could be exceeded more quickly if consumers receive numerous unwanted telemarketing calls?” Moreover, as several commenters point out, telemarketers have no way to determine how consumers are charged for their wireless service.

166. Although the same economic and safety concerns apply to all telephone solicitation calls received by wireless subscribers, the Commission has determined not to prohibit all live telephone solicitations to wireless numbers.61’ The national do-not-call database will allow for the registration of wireless telephone numbers for those subscribers who wish to avoid live telemarketing calls to their wireless phones. Wireless subscribers thus have a simple means of preventing most live telemarketing calls if they so desire!” Moreover, relying on the do-not- call database to control live telephone solicitations recognizes that prohibiting such calls to wireless numbers may unduly restrict telemarketers’ ability to contact those consumers who do not object to receiving telemarketing or only ph0ne.6’~

and use their wireless phones as either their primary

167. The Commission’s rules provide that companies making telephone solicitations to residential telephone subscribers must comply with time of day restrictions and must institute procedures for maintaining do-not-call lists!” For the reasons described we conclude

See, e.g., Verizon Wireless Comments at I I ; 1. Shaw Comments at 5 ; NAAG Comments at 40-41

See, e.& AT&T Wireless Comments at 24

MB

609

610Consistent with our determination in 1992, calls made by cellular carriers to their subscribers, for which subscribers are not charged in any way for the call (either on a per minute, per call. or as a reduction in their ‘‘bucket” of minutes) are not prohibited under the TCPA. See Verizon Wireless Comments at I 1 (noting that for “bucket” plans, exceeding the bucket allowance is not unusual).

We note, however. that the TCPA already prohibits live solicitation calls to wireless numbers using an autodialer. See 47 U.S.C. 5 227(b)(l).

Registration on the do-not-call database will not prevent calls from entities that have an established business relationship with a wireless subscriber. Wireless subscribers who receive such live calls can easily make a company-specific do-not-call request. Moreover, we note that the record reveals that telemarketing to wireless numbers is not widespread at this time.

See Bell South Comments at 6-7; ARDA Comments at 12

A USA Today/CNN/Gallop poll found that almost one in five mobile telephony users regard their wireless 614

phone as their primary phone. 2002 CMRS Comperirion Repon. Section ILA.l.e, citing Michelle Kessler, 18% See Cellphones as Their Main Phone, USA Today, Feb. I , 2002.

See 47 C.F.R. 5 64.1200(e).

See supra paras. 33-36. See also 47 U.S.C. 5 227(b)( I)(A)(iii).

615

616

101


that these rules apply to calls made to wireless telephone numbers. We believe that wireless subscribers should be afforded the same protections as wireline sub~cribers.~”

2.

Based on the evidence in the record, we find that i t is not necessary to add rules to implement the TCPA as a result of the introduction of wireless LNP and thousands-block number pooling. The TCPA rules prohibiting telemarketers from placing autodialed and prerecorded message calls to wireless numbers have been in place for twelve Commission’s pooling requirements have been in place for several years and the porting requirements have been in place for over five years. Accordingly, telemarketers have received sufficient notice of these requirements in order to develop business practices that will allow them to continue to comply with the TCPA.

Wireless Number Portability and Pooling

168.

Further, the

169. Additionally, telemarketers have taken measures in the past to identify wireless numbers, and there is no indication that these measures would not continue to be effective for identifying wireless numbers affected by pooling and porting. As noted above, the industry currently makes use of a variety of tools to enable it to avoid making prohibited calls. As discussed in detail supra:1v the record provides a sampling of methods, including the DMA’s “Wireless Telephone Suppression Service,’’ that telemarketers use to avoid making prohibited calls to wireless numbers.620

170. LNP and pooling do not make it impossible for telemarketers to comply with the TCPA. The record demonstrates that information is available from a variety of sources to assist telemarketers in determining which numbers are assigned to wireless carriers. For example, NeuStar as the North American Numbering Plan Administrator, the National Pooling Administrator, and the LNP Administrator makes information available that can assist telemarketers in identifying numbers assigned to wireless carriers. Also, other commercial enterprises such as Telcordia, the owner-operator of the Local Exchange Routing Guide (LERG) maintain information that can assist telemarketers in identifying numbers assigned to wireless carriers. We acknowledge that beginning November 24,2003, numbers previously used for wireline service could be ported to wireless service providers and that telemarketers will need to take the steps necessary to identify these numbers. We also note that there are various solutions that will enable telemarketers to identify wireless numbers in a pooling and number portability environment. We decline to mandate a specific solution. but rather rely on the telemarketing industry to select solutions that best fit telemarketers’ needs. The record demonstrates that telemarketers have found adequate methods in the past to comply with the TCPA’s prohibition on telephone calls using an autodialer or an artificial or prerecorded voice message to any

611 See. e.& Citigroup Comments at 6: Cingular Wireless Comments at 6-7; John Shaw Reply Comments at 14

See supra paras. 160-163. 618

‘Iv See supra para. 163

Cingular Wireless Comments at 5 ; DMA Comments at 35; Letters from Neustar to FCC, filed January 23,2003 620

and May 5,2003.

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telephone number assigned to a cellular telephone service, a paging service, or any service for which the called party is charged for the call. We expect telemarketers to continue to make use of the tools available in the marketplace in order to ensure continued compliance with the TCPA.”’

171. Moreover, the record indicates that telemarketing to wireless phones is not a significant problem, indicating that the industries’ voluntary efforts have been successful.‘2’ Commenters further declare that the wireless and telemarketing industries have been actively working together to ensure that telemarketing does not become a problem for wireless customers.

172. Finally, we reject proposals to create a good faith exception for inadvertent autodialed or prerecorded calls to wireless numbers and proposals to create implied consent because we find that there are adequate solutions in the marketplace to enable telemarketers to identify wireless n~mbers .6~~

XII. CALLER IDENTIFICATION

A. Background

173. In the 1992 TCPA Order, the Commission considered whether to require telemarketers to use a special area code or telephone number prefix that would allow consumers to block unwanted telephone solicitations using a caller identification (caller ID) service. Based on cost and the “technological uncertainties associated with implementation,” the Commission declined to adopt any type of network technologies to accomplish the objectives of the TCPA.6”

174. In the 2002 Notice, the Commission sought comment on whether network technologies have been developed over the last decade that may allow consumers to avoid receiving unwanted telephone solicitations. The Commission sought comment specifically on whether to require telemarketers to transmit the name and telephone number of the calling party, when possible, or prohibit them from blocking or altering the transmission of such information.‘” Comments filed by consumers, state utility commissions, and wireless service providers generally support a requirement that telemarketers transmit caller identification information.‘” Consumers are frustrated by the failure of many telemarketers to transmit caller

621 See Letter from Neustar to FCC. filed June 4.2003.

ABA Comments at 5: AT&T Wireless Comments at 29: Cingular Wireless Comments at 4; ATA Reply Comments at 78; AT&T Wireless Reply Comments at 21.

623 See ATA Comments at 134-36; BMO Financial Group Comments at 6; Sprint Comments at 21; ATA Reply Comments at 82. Commenters also suggest other exceptions, such as where a subscriber uses wireless as his sole telephone service, AGF Comments at 1, or where the subscriber provides his wireless number as a contact number to a business. Id. See also Bank of America Comments at 6; CBA Comments at 9; BellSouth Comments at 6-7.

‘” See 1992 TCPA Order, 7 FCC Rcd at 8762. para. 17.

2002 Notice, 17 FCC Rcd at 17473, para 22.

‘” Thomas Pechnik Comments at 4: TOPUC Comments at 3; Wayne G. Strang Comments at 15: Michael C. Worsham Comments at 4; Samuel E. Whitley Comments at 2; HFS Comments at 6; CTIA Comments at I; Michael (continued.. ..)

103


ID information, which, under certain circumstances, makes it difficult for consumers to enforce the TCPA.” Commenters also noted that the increased use of predictive dialers has led to a corresponding increase in the number of hang-ups. Caller ID information would allow consumers, they contend, to identify those telemarketers responsible for hang-up calls.628 Some commenters stated that the inability to identify callers has led them to purchase other tools, such as the “telezapper,” to try to stop unwanted solicitation calls.6” Most commenters that addressed these issues support a prohibition against the blocking of caller ID information.630 Several parties stated that the Commission should prohibit blocking independent of any caller ID mandate.631 It was also suggested that the Commission could prohibit tampering with data or providing false data.”’

175. Some industry members suggest that the transmission of caller ID information may not be technically possible in all requirement could be costly for tele1narketers.6’~ One particular concern raised by parties opposed to a caller ID mandate is the technical feasibility of transmitting caller ID information when using private branch exchanges (PBX). WorldCom maintains that, in situations where

They also maintain that a caller ID

(Continued from previous page) J. Blitch Comments at 5 ; AT&T Wireless Comments at 23; ARDA Comments at 9; Louis I Hoppman Jr. Comments; PUC of Ohio Comments at 19; TN AG Comments at 13; DialAmerica Comments at 11-12; Stewart Abramson Comments at 3; Thomas F. Kirby Comments; David Griffth Comments; Ghita & Stephan Strain Comments.

627 See, e.&, Brad Totten Comments at 3; DC Hunter Comments; James D. Gagnon Comments; Brian Klug Comments; Thomas Pechnik Comments at 4; NCL Comments at 3; EPIC Comments at 12; Verizon Reply Comments at 12.

See. e.&, F. Jenny Holder Comments at 1: Thomas Callahan Comments; Michael C. Worsham Comments at 2; 628

NCL Comments at 4; Gregory S. Reichenbach Comments; TOPUC Comments at 6-7; EPIC Comments at 12; Stewart Abramson Comments at 3; Thomas Pechnik Comments at 4; AGF Comments at 4; Joe Shields Comments at I.

629 OPC-DC Comments at 6; Janice G. Farkosh Comments; Leslie Price Comments; Josephine K. Presley Comments.

See, e&. Verizon Comments at 18; PRC Comments at 5; NYSCPB Comments at 9: PUC of Ohio Comments at 630

19.

OPC-DC Comments at 6; Owen O’Neill Comments at 1: TOPUC Comments at 3; Technion Comments at 6-7; Verizon Comments at 18; PUC of Ohio Comments at 19, NASUCA Comments at 3; Thomas Pechnik Comments at 4. But see NAA Comments at 17; Nextel Comments at 17-18; Comcast Comments at 14; Teleperfomance Comments at 3; ABA Comments at 3 (should restrict caller ID blocking, but not require the transmission of caller ID).

632 Stewart Abramson Comments at 3.

631

Teleperformance Comments at 3; WorldCom Comments at 45; DMA Reply Comments at 30; Mastercard Comments at 7; Nextel Comments at 17-18; SER Comments at 2; Sprint Comments at 7; ECN Comments at 9 (asserting that telemarketers will provide caller ID when technologically feasible, and thus, the Commission need not adopt a caller ID requirement).

633

Teleperfonnance Comments at 3; WorldCom Comments at 45; DMA Reply Comments at 30; Nextel Comments 634

at 18; SER Comments at 2; Sprint Comments at 7-8.

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telemarketers use a PBX that connects to their telephone company through typical T-1 trunks, Calling Party Number (CPN) cannot be tran~mitted.6~’ WorldCom contends that Integrated Services Digital Network (ISDN) T-1 trunks may be capable of transmitting CPN, but that typical T-1 trunks do not have this capability.636 DialAmerica notes that it has been delivering CPN for over two years using regular T-1 trunk groups provisioned by A T ~ L T . ~ ~ ’ DialAmerica transmits an outgoing number which is captured by caller ID equipment. If a consumer chooses to call that number, the local exchange carrier (LEC) forwards the call to DialAmerica’s customer service d enter.^" DialAmerica asserts that ISDN T-1 trunks are available from all carriers and enable a user to control whether CPN is delivered and what telephone number is displayed.639 WorldCom notes that even if we accept DialAmenca’s assertion that ISDN trunks are universally available, carriers would have to upgrade network switches to accommodate additional digital switch ports necessitated by telemarketers’ shift to ISDN-PRI trunks.w

176. Telemarketers also raised technical concerns that the ability to transmit caller ID information is dependent on the deployment of Signaling System 7 (SS7).64’ They argue that SS7 is not nationally deployed and thus the capability to transmit caller ID is not available throughout the country.M2 Moreover, they maintain that Commission rules exempt PBX and Centrex systems from existing caller ID requirements because some of them cannot transmit CPN,@’ and not all carriers are able or permitted to transmit CPN. if they lack blocking capability.M4 The DMA and WorldCom expressed concern that regardless of whether the telemarketer is able to transmit CPN, consumers will expect it, and may incorrectly believe a company has violated the rules.645

177. Several parties argue that even ‘if a telemarketer can transmit CPN information,

~ ~ ~~~ ~ ~~ ~

WorldCom Reply Comments at 23 635

636 WorldCom Reply Comments at 23. We note that both typical T-l and ISDN trunks contain 24 channels. ISDN trunks dedicate one channel specifically to data transmission, while typical T-l lines dedicate all 24 channels to voice transmission.

DialAmerica Comments, Attachment A at 1

638 DialAmerica Comments, Attachment A at 2.

637

639 DialAmerica Comments, Attachment A at 1

WorldCom Reply Comments at 24

‘‘Signaling System 7” (SS7) refers to a carrier to carrier out-of-band signaling network used for call routing, 641

billing and management. See 47 C.F.R. 5 64.3600(f).

DMA Reply Comments at 30. 642

M3 See47 C.F.R. 5 64.1601(d).

DMA Reply Comments at 29-30. But see NASUC.4 Comments at 9; Verizon Comments at 18 (indicating that 644

caller ID is technically viable because CPN is transmitted to the LECs).

DMA Reply Comments at 30; WorldCom Reply Comments at 26. 645

105


how to transmit a number that is useful to consumers remains a challenge.% Comments were mixed on what information actually needed to be transmitted for purposes of caller ID. Several parties opined that the name of the telemarketing operator would be adequate identification.@’ Others asserted that the name of the company on whose behalf the call was being made should be provided.M8 Emergency Communications Network argued that a company’s website information should be a permitted as a substitute for the name and phone number.@’

178. The FTC’s amended TSR mandates transmission of caller ID information and prohibits any seller or telemarketer from “failing to transmit or cause to be transmitted the telephone number, and when made available by the telemarketer’s carrier, the name of the telemarketer, to any caller identification service in use by a recipient of a telemarketing Under the FTC’s rule, telemarketers may transmit any number associated with the telemarketer that allows the called consumer to identify the caller.6” The FTC concluded that transmission of caller ID would provide increased accountability and was technically feasible at minimal costs to telemarketers. The DMA stated that it was concerned that technical issues were not adequately taken into account during the FTC’s proceeding. The DMA requested that the FCC initiate a comprehensive review of the technical feasibility of caller ID.6”

B. Discussion

179. The Commission has determined to require all sellers and telemarketers to transmit caller ID information, regardless of their calling systems. In addition, any person or entity engaging in telemarketing is prohibited from blocking the transmission of caller ID information. Caller ID information must include either ANI or CPN and, when available by the telemarketer’s carrier, the name of the telemarketer. If the information required is not passed through to the consumer, through no fault of the telemarketer originating the call, then the telemarketer will not be held liable for failure to comply with the rules.653 In such a circumstance, the telemarketer must provide clear and convincing evidence that the caller ID

M6 See, e+. DMA Reply Comments at 30.

Jeff Mitchell Comments at 1; Martin C. Kaplan Comments at 2; City of New Orleans Comments at 8.

648 Jeff Mitchell Comments at 1: NCL Comments at 4; Xpedite Systems Comments at 12; PRC Comments at 5.

ECN Comments at 4.

FTC Order, 68 Fed. Reg. at 4623.

FTC Order, 68 Fed. Reg. at 4625.

M P

65 I

652 DMA Reply Comments at 30. The DMA notes that the FCC has the requisite experience to evaluate technical feasibility and a more comprehensive view of the larger issues of how a caller ID requirement might fit into the regulation of the communications network as a whole. See DMA Reply Comments at 29.

See WorldCom Reply Comments at 26 (arguing that requiring caller ID could create an expectation in the minds of consumers that they should always receive the information and that such a regulation creates a situation where companies will be unfairly accused of brealong the law, and as a consequence, face undue litigation and harm to their reputations).

106


information could not be transmitted. However, the Commission concurs with the FTC that caller ID information can be transmitted cost effectively for the vast majority of calls made by telemarketers.6s4 Caller ID allows consumers to screen out unwanted calls and to identify companies that they wish to ask not to call again. Knowing the identity of the caller is also helpful to consumers who feel frightened or threatened by hang-up and “dead air” ~ a l l s . 6 ~ ~ We disagree with those cornmenters who argue that caller ID information only benefits those consumers who subscribe to caller ID services.a6 Consumers can also use the *69 feature to obtain caller ID information transmitted by a tele~narketer.~~’ Caller ID also should increase accountability and provide an important resource for the FCC and FTC in pursuing enforcement actions against TCPA and TSR violators.658

180. We conclude that while SS7 capability is not universally available, the vast majority of the United States has access to SS7 infrastructure. The SS7 network contains functionality to transmit both the CPN and the charge number.6s9 Under the Commission’s rules, with certain limited exceptions, common carriers using SS7 and offering or subscribing to any service based on SS7 functionality are required to transmit the CPN associated with an interstate call to connecting carriers.660 Regardless of whether SS7 is available, a LEC at the originating end of a call must receive and be able to transmit the Automated Number Identification (ANI) to the connecting carrier,661 as the ANI is the number transmitted through the network that identifies the calling party for billing purposes. Thus, we determine that telemarketers must ensure that either CPN or ANI is made available for all telemarketing calls in order to satisfy their caller ID requirements. Whenever possible, CPN is the preferred number and should be transmitted.663

See Nextel Further Comments at 16 (stating that most telemarketers are currently capable of transmitting caller ID using their existing equipment, and that the FCC should adopt an approach similar to the ITC’s, if i t chooses to regulate the transmission of caller ID for telemarketing calls).

655 Cynthia Stichnoth Comments; Stewart Abramson Comments at 1.

See, e.g.. Sprint Comments at 7-8, CBA Comments at 8. 656

”’ The *69 feature. available through many subscribers’ telephone service providers, provides either: (1) information regarding the last incoming call, and the option to dial the caller back, or (2) the ability to return the last incoming call. Call information. however, would not be available for an incoming call, if the caller failed to transmit caller ID information or blocked such information.

See FTC Order, 68 Fed. Reg. at 4623-24.

659 “Charge number’’ is defined in 47 C.F.R. 564.1600(d) and refers to the delivery of the calling party’s billing number by a local exchange carrier for billing or routing purposes. and to the subsequent delivery of such number to end users.

660 see47 C.F.R. 55 64.1600.64.1601.

The term “ANI” refers to the delivery of the calling party’s billing number by a local exchange carrier to any interconnecting carrier for billing or routing purposes, and to the subsequent delivery to end users. See 41 C.F.R. $ 64 .1Wb) . ANI is generally inferred by the switch. Each line termination on the telco switch corresponds to a different phone number for ANI.

662 Provision of Caller ID information does not obviate the requirement for a caller to verbally supply identification information during a call. See 47 C.F.R. ?j 64.1200(e)(iv).

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Consistent with the FI'C's rules, CPN can include any number associated with the telemarketer or party on whose behalf the call is made, that allows the consumer to identify the caller."' This includes a number assigned to the telemarketer by its carrier, the specific number from which a sales representative placed a call, the number for the party on whose behalf the telemarketer is making the call, or the seller's customer service number. Any number supplied must permit an individual to make a do-not-call request during regular business hours for the duration of the telemarketing campaign.-

181. As discussed above, some commenters state that it is not technically feasible for telemarketers to transmit caller ID information when using a PBX and typical T-1 trunks."' As noted by NASUCA, the Commission's rules exempt from the current caller ID rules, PBX and Centrex systems which lack the capability to pass CPN information. Regardless of whether a call is made using a typical T-1 trunk or an ISDN trunk, ANI is transmitted to the Local Exchange Carrier for billing purposes.- With both PBX and Centrex systems, the carrier can determine the billing number from the physical line being used to make a call, even if the billing number is not transmitted along that line to the carrier. We are cognizant of the fact that with PBX and Centrex systems, the billing number could be associated with multiple outgoing lines. Nevertheless, telemarketers using PBX or Centrex systems are required under the new rules not to block ANI, at a minimum, for caller ID purposes.

182. We recognize that ISDN technology is preferred, as it presents the opportunity to transmit both CPN and ANI. However, in situations where existing technology permits only the transmission of the ANI or charge number, then the ANI or charge number will satisfy the Commission's rules, provided it allows a Consumer to make a do-not-call request during regular business hours."' By allowing transmission of ANI or charge number to satisfy the caller ID requirement, we believe that carriers need not incur significant costs to upgrade T-1 and ISDN switches.668 For these same reasons, we also believe that mandating caller ID will not create a

663 See FTC Order, 68 Fed. Reg. at 4623-28.

This would mean 900 a.m. - 5:OO p.m. Monday through Friday. A seller or telemarketer calling on behalf of a 6M

seller must be able to record do-not-call requests at the number transmitted to consumers as caller ID. Therefore, if the person answering the calls at this number is not the sales representative who made the call or an employee of the seller or telemarketer who made the call, or if the telemarketer is using an automated system to answer the calls, the seller is nevertheless responsible for ensuring that any do-not-call request is recorded and the consumer's name, if provided, and telephone number are placed on the seller's do-not-call list at the time the request is made. See also supra note 492.

"' See supra para. 175

666 See Telcordia Notes on the Networks -Notes Design and Configuration. Telcordia Technologies Special Report SR-2215, Issue 4, October 2000, pp. 4-30. See ulso, Administration of rhe North American Numbering Plan, Carrier Identficution Codes (CICs). CC Docket No. 92-237, Second Report and Order, 12 FCC Rcd 8024 (1997).

We note that a telemarketer using a service that prevents the transmission of the required caller ID information 661

will be in violation of the Commission's caller ID rules.

668 See WorldCom Reply Comments at 26.

108


competitive advantage towards particular ISDN technology, we expect that telemarketers will increasingly be able to transmit the preferred CPN instead of ANI or charge number.

As typical T-1 technology is upgraded to

183. Finally, the record strongly supports a prohibition on blocking caller ID information!” Both NCL and NASUCA state that there is no valid reason why a telemarketer should be allowed to intentionally block the transmission of caller ID.671 We conclude that the caller ID requirements for commercial telephone solicitation calls do not implicate the privacy concerns associated with blocking capability for individual^.^" We recognize that absent a prohibition on bloclung, a party could transmit CPN in accordance with the new rules and simultaneously transmit a request to block transmission of caller ID information. Thus, the Commission has determined to prohibit any request by a telemarketer to block caller ID information or ANI.

184. As explained above, the TCPA seeks primarily to protect subscribers from unrestricted commercial telemarketing calls. Therefore, the Commission has determined not to extend the caller ID requirements to tax-exempt nonprofit organizations. However, the caller ID rules will apply to all other companies engaged in telemarketing, and the existence of an established business relationship between the telemarketer and the consumer shall not be an exception to these rules. For all covered entities, the effective date of the caller ID requirements will be January 29,2004.6’~ This will provide telemarketers a reasonable period of time to obtain or update any equipment or systems to enable them to transmit caller ID information. We decline to extend the effective date beyond January 29,2004, which is consistent with the date on which telemarketers are required to comply with the ~ C ’ S caller ID provision.”‘

XIII. UNSOLICITED FACSIMILE ADVERTISEMENTS

A. Background

185. The TCPA prohibits the use of any telephone facsimile machine, computer or

669 See, e.g., Discover Comments at 7; DMA Reply Comments at 30.

See, e.g., TOPUC Comments at 3; Verizon Comments at 18; Owen O’Neill Comments at I; Rob McNeal 610

Comments; Jeff Mitchell Comments at 1.

NASUCA Comments at 8-9 NCL Comments at 3. 611

‘12 See 47 C.F.R. 8 64.1601(b).

‘”See new rule at 47 C.F.R. 8 64.1601(e). See also FK Further Comments (explaining that the goals of regulatory consistency will be promoted if the FCC adopts caller ID requirements analogous to Amended TSR 16 C.F.R. 8 310.4(a)(7)).

See Notices of Ex Porte Piesenrotions from WorldCom to FCC. filed May 23.2003 and June 16,2003 (advocating a 13-month implementation period for the caller ID rules). See also FTC Further Comments (explaining that the goals of regulatory consistency will be promoted if the FCC adopts caller ID requirements analogous to Amended TSR 16 C.F.R. 0 310.4(a)(7)).

614

109


other device to send an “unsolicited advertisement” to a telephone facsimile m ~ h i n e . ~ ” An unsolicited advertisement is defined as “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person’s prior express invitation or permission.”676 The TCPA also requires those sending any messages via telephone facsimile machines to identify themselves to message recipients?” In the 1992 TCPA Order, the Commission stated that “the TCPA leaves the Commission without discretion to create exemptions from or limit the effects of the prohibition.”‘” It noted, however, that facsimile transmission from persons or entities that have an established business relationship with the recipient can be deemed to be invited or permitted by the re~ipient.6’~ The Commission sought comment on the effectiveness of these regulations and on any developing technologies, such as computerized fax servers, that might warrant revisiting the rules on unsolicited faxes!” We specifically asked about the need to clarify what constitutes prior express invitation or permission for purposes of sending an unsolicited fax.”’

186. The record indicates that some consumers feel “besieged” by unsolicited faxes;“’ others explain that advertisers continue to send faxes despite asking to be removed from senders’ fax li~ts.6~’ Consumers emphasize that the burden of receiving unsolicited faxes is not just limited to the cost of paper and toner, but includes the time spent reading and disposing of faxes, the time the machine is printing an advertisement and is not operational for other purposes, and the intrusiveness of faxes transmitted at inconvenient times, including in the middle of the

‘” 47 U.S.C. 8 227(b)(l)(C). The United States Court pf Appeals for the Eighth Circuit recently upheld the TCPA’s provision on unsolicited faxes as satisfying the constitutional test for regulation of commercial speech. See Missouri ex re1 Nixon v. American Blast Fax, lnc., 323 F.3d 649 (8th Cir. 2003) (petifion for rehearing pending j.

“‘47 C.F.R. 8 64.1200(Q(5).

6n Specifically. the TCPA provides that the facsimile include “in a margin at the top or bottom of each transmitted page of the message or on the first page of the transmission, the date and time it is sent and an identification of the business. other entity, or individual sending the message and the telephone number of the sending machine or of such business, other entity, or individual.” 47 U.S.C. 5 227(d)( I)(B). The Commission determined that the sender of a facsimile message is the creator of the content of the message. See 1997 Reconsideration Order, 12 FCC Rcd at4613.para.6.

”’ 1992 TCPA Order, 7 FCC Rcd at 8779. para. 54. n. 17

1992 TCPA Order, 7 FCC Rcd at 8779, para. 54. n. 17 619

‘“ 2002 Notice, 17 FCC Rcd at 17482, para. 37

“’ 2002 Notice, 17 FCC Rcd at 17482-83. para. 38. Thc Commission sought comment specifically on the Commission’s determination that a prior business relationship between a fax sender and recipient establishes the requisite consent to receive telephone facsimile advertisement transmissions. See 2002 Notice. 17 FCC Rcd at 17483, para. 39.

“* Chris Hernandez Comments; Damien Blevins Comments; Peter LeCody Comments; Joe Shields Comments at 6; Mathemaesthetics Comments at 2.

683 Anthony Oppenheim Comments; W. Allen Wilkens, Jr. Comments.

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night.684 Some of the consumer advocates maintain that the current rules are ineffe~tive~~’ and urge the Commission to take tougher measures to stop unwanted faxes by stricter enforcement measures,686 including higher penalties. A few home-based businesses and other companies maintain that facsimile advertisements interfere with receipt of faxes connected to their own business, and that the time spent collecting and sorting these faxes increases their labor ~ o s t s . 6 ~ ~ Industry members maintain that faxing is a cost-effective way to reach customers,688 and that the current exemption for established business relationships works well,bg9 particularly for small businesses for whom faxing is a cheaper way to advertise.6w

B. Discussion

1.

The Commission has determined that the TCPA requires a person or entity to obtain the prior express invitation or permission of the recipient before transmitting an unsolicited fax advertisement. This express invitation or permission must be in writing and include the recipient’s signature.” The recipient must clearly indicate that he or she consents to receiving such faxed advertisements from the company to which permission is given, and provide the individual or business’s fax number to which faxes may be sent.

Prior Express Invitation or Permission

187.

188. Established Business Relationship. The TCPA does not act as a total ban on fax advertising. Persons and businesses that wish to advertise using faxes may, under the TCPA, do

684 J. Greg Coontz Comments at 15-17

685 NCL Comments at 6.

Dennis C. Brown Comments at 13; City of New Orleans Comments at 1 1

687 Jim Carter Comments: IC Homola Comments; Autoflex Comments at 1-2; Rob McNeal Comments (unsolicited faxes costs company tens of thousands of dollars each year in materials and employee time); see also NCL Comments at 6 (“[Pleople who work out of their homes are especially harmed by unsolicited faxes, which use up their paper and toner and tie up their machines.”); Mathemaesthetics Reply Comments at 7 (“[Ulnsolicited [fax] ads caused my business fax machine to become prematurely empty. which rendered wholly useless the equipment my small business crucially depends on for its revenue. When a customer of mine a short time later attempted to fax a purchase order for over $3,000 worth of my company’s product. my empty fax machine was not able to capture this transaction for a significant period of time.. .” (emphasis in original)).

ABM Comments at 4 (Members have found that targeted fax communication is cost-effective way to seek renewal “request” forms from existing subscribers, and to communicate with subscribers about industry trade shows.).

MPA Comments at 22; Nextel Comments at 25; NADA Comments at 2; Scholastic Comments at 13; Reed 689

Comments at 2-3.

6w NADA Comments at 2; NFIB Comments at 3

691 The term “signature” in the amended rule shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a valid signature under applicable federal law or state contract law. See. e&. Cendant Comments at 6.

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so with the express permission of the recipients. In the 2002 Norice, we sought comment on whether an established business relationship between a fax sender and recipient establishes the requisite consent to receive telephone facsimile ad~ertisements.6~’ The majority of industry commenters support the finding that facsimile transmissions from persons or entities that have an established business relationship with the recipient can be deemed to be invited or permitted by the These commenters maintain that eliminating the EBR exemption for facsimile advertisements would interfere with ongoing business relationships, raise business costs, and limit the flow of valuable information to consumers.”‘ They urge the Commission to amend the rules to expressly provide for the EBR exempti0n.6~’ Conversely, the majority of consumer advocates argue that the TCPA requires companies to obtain express permission from consumers-even their existing customers-before transmitting a fax to a consumer.696 Some consumer advocates maintain that the Commission erred in its 1992 determination that a consumer, by virtue of an established business relationship, has given his or her express invitation or permission to receive faxes from that c0mpany.6~’ They urge the Commission to eliminate the EBR exemption, noting that Congress initially included in the TCPA an EBR exemption for faxes, but removed it from the final version of the statute.698

*’ 2002 Notice, 17 FCC Rcd at 17483, para. 39.

693 ABM Comments at 9; DIRECTV Comments at 9-19; Hunton & Williams Comments at 5-6 Lorman Further Comments at 7 (noting that parties with an established business relationship expect to be in communications with companies with which they do business. and that any company that transmits ads by fax should be required to maintain a company-specific do-not-fax list).

Nextel Reply Comments at 6.

See Xpedite Reply Comments at 6; ABM Comments at 4-5; Nextel Comments at 25; DIRECTV Comments at

694

695

9- IO; Lonnan Further Comments at 8.

6% Biggerstaff Reply Comments at 22 (noting that express permission can easily be requested from existing customers, as paperwork is exchanged between merchants and their customers regularly); NAAG Comments at 31 (stating that treating express consent on a case-by-case basis can be costly and time-consuming, as consent is the main defense asserted by fax advertisers. NAAG suggests that the Commission adopt a concrete definition of “express,” meaning definite, explicit or direct, and not left to inference).

69’ NAAG Comments at 3 1-32 (arguing that creating an established business relationship exception runs contrary to the clear wording of the statute. ‘The TCPA defines ‘unsolicited advertisement’ as an advertisement sent to a person ‘without that person’s prior express invitation or permission.’ A business relationship exemption would rely on implied invitation or permission which is contrary to the clear wording of the statute.” (emphasis in original; footnotes omitted)); Mark R. Lee Comments; Biggerstaff Comments at 3; John Holcornb Comments at 4; Kondos & Kondos Comments at 3-4; Marc A. Wiles Comments; Wayne G. Strang Comments at 12; Michael C. Worsham Comments at 13; Wayne G. Strang Reply Comments at 16. Bur see NYSCPB Comments at I8 (recommends retaining the EBR as permission to receive faxes).

698 See Kondos & Kondos Comments at 1-2 and Exhibit A (noting that three versions of the House predecessor bill to the TCPA included an EBR exemption for unsolicited fax ads. “Not only is an EBR not a defense to unsolicited fax advertising under the TCPA, the US. Congress specifically included such a defense in numerous predecessor TCPA bills and then excluded it in the law which overwhelmingly passed in 1991.” Kondos & Kondos Comments at 2); John Holcomb Comments at 4; Biggerstaff Comments at 3.

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FCC 03-153 Federal Communications Commission

189. We now reverse our prior conclusion that an established business relationship provides companies with the necessary express permission to send faxes to their customers. As of the effective date of these rules, the EBR will no longer be sufficient to show that an individual or business has given their express permission to receive unsolicited facsimile advertisernentsfw The record in this proceeding reveals consumers and businesses receive faxes they believe they have neither solicited nor given their permission to receive. Recipients of these faxed advertisements assume the cost of the paper used, the cost associated with the use of the facsimile machine, and the costs associated with the time spent receiving a facsimile advertisement during which the machine cannot be used by its owner to send or receive other facsimile

190. The legislative history indicates that one of Congress’ primary concerns was to protect the public from bearing the costs of unwanted advertising. Certain practices were treated differently because they impose costs on consumers. For example, under the TCPA, calls to wireless phones and numbers for which the called party is charged are prohibited in the absence of an emergency or without the prior express consent of the called party.”’ Because of the cost shifting involved with fax advertising, Congress similarly prohibited unsolicited faxes without the prior express permission of the recipient?’* Unlike the do-not-call list for telemarketing calls, Congress provided no mechanism for opting out of unwanted facsimile advertisements. Such an opt-out list would require the recipient to possibly bear the cost of the initial facsimile and inappropriately place the burden on the recipient to contact the sender and request inclusion on a “do-not-fax” list.”’

191. Instead, Congress determined that companies that wish to fax unsolicited advertisements to customers must obtain their express permission to do so before transmitting any faxes to them.704 Advertisers may obtain consent for their faxes through such means as direct mail, websites, and interaction with customers in their stores. Under the new rules, the permission to send fax advertisements must be provided in writing, include the recipient’s

6w See 1992 TCPA Order, 7 FCC Rcd at 8779, para. 54, n. 87 (finding that facsimile transmissions from persons or entities that have an established business relationship with the recipient can be deemed to be invited or permitted by the recipient). See also 47 C.F.R. 64.1200(f)(4) for the definition of an “established business relationship.” We emphasize that, prior to the effectuation of rules contained herein, companies that transmitted facsimile advertisements to customers with whom they had established business relationships were in compliance with the Commission’s existing rules.

lcm NCL Comments at 6; Michael J. Blitch Comments at 7; Autoflex Comments at 1-2.

See 47 U.S.C. 5 227(b)( 1). 701

’02 47 U.S.C. $5 227(b)(l)(C) and (a)(4).

703 See, e.8.. Blocklist.com Comments (operates a national do-not-fax list); Davide Di Labio Comments (should be a national fax list for those opposed to faxes); William B. Hayes Comments (no-fax lists are an alternative solution); Paul Aratow Comments (do-not-fax lists do not work); W. Allen Wilkins Comments (after responding to a “remove your fax number,’’ receives more faxes).

See 47 U.S.C. §$227(b)(l)(C) and (a)(4). 704

113

http://Blocklist.com


signature and facsimile number, and cannot be in the form of a “negative ~pt ion.””~ For example, a company that requests a fax number on an application form could include a clear statement indicating that, by providing such fax number, the individual or business agrees to receive facsimile advertisements from that company. Such statement, if accompanied by the recipient’s signature, will constitute the necessary prior express permission to send facsimile advertisements to that individual or business. We believe that even small businesses may easily obtain permission from existing customers who agree to receive faxed advertising, when customers patronize their stores or provide their contact information. The Commission believes that given the cost shifting and interference caused by unsolicited faxes, the interest in protecting those who would otherwise be forced to bear the burdens of unwanted faxes outweighs the interests of companies that wish to advertise via fax.

192. Membershiu in a Trade Association. In its 1995 Reconsideration Order, the Commission determined that mere distribution or publication of a telephone facsimile number is not the equivalent of prior express permission to receive faxed advertisement^.^" The Commission also found that given the variety of circumstances in which such numbers may be distributed (business cards, advertisements, directory listings, trade journals, or by membership in an association), it was appropriate to treat the issue of consent in any complaint regarding unsolicited facsimile advertisements on a case-by-case ba~is.7”~ In the 2002 Norice, we sought comment specifically on the issue of membership in a trade association or similar group and asked whether publication of one’s fax number in an organization’s directory constitutes an invitation or permission to receive an unsolicited fax.’08 The American Business Media argued that those willing to make fax numbers available in directories released to the public do so with an expectation that such fax numbers will be used for a d v e r t i ~ i n g . ~ ~ Consumer advocates, however, contend that publicly listing a fax number is not a broad invitation to send commercial faxes.”’ TOPUC asserted that businesses often publish their fax numbers for the convenience of their customers, clients and other trade association members, not for the benefit of

A facsimile advertisement containing a telephone number and an instruction to call if the recipient no longer wishes to receive such faxes, would constitute a “negative option.” This option (in which the sender presumes consent unless advised otherwise) would impose costs on facsimile recipients unless or until the recipient were able to ask that such transmissions be stopped.

70s

1995 Reconsideration Order, 10 FCC Rcd at 12408-09, para. 37.

1995 Reconsideration Order, 10 FCC Rcd at 12408-09, para. 37.

2W2 Notice, 17 FCC Rcd at 17482-83, para. 38.

ABM Comments at 8; see also Brunswick Comments at 8-10; DIRECTV Comments at 11 (generally,

707

708

lo9

publication of a fax number should constitute permission, but consumers should be able to control the circumstances under which they will receive faxes. For example, a trade association could note in its directory that faxes are not to be used for advertising purposes).

710 See. e.g., NCL Comments at 6; NAAG Comments at 3 1; TOPUC Comments at 6; John Holcomb Comments at 4.

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FCC 03-153 Federal Communications Commission

telemarketers.‘”

193. The Commission agrees that fax numbers are published and distributed for a variety of reasons, all of which are usually connected to the fax machine owner’s business or other personal and private interests. The record shows that they are not distributed for other companies’ advertising purposes. Thus, a company wishing to fax ads to consumers whose numbers are listed in a trade publication or directory must first obtain the express permission of those consumers. Express permission to receive a faxed ad requires that the consumer understand that by providing a fax number, he or she is agreeing to receive faxed advertisements. We believe the burden on companies to obtain express permission is warranted when balanced against the need to protect consumers and businesses from bearing the advertising costs of those companies. Finally, the Commission affirms that facsimile requests for permission to transmit faxed ads, including toll-free opt-out numbers, impose unacceptable costs on the recipients. This kind of “negative option” is contrary to the statutory requirement for prior express permission or invitation.’”

2. Fax Broadcasters

The Commission explained in the 2002 Notice that some fax broadcasters, who transmit other entities’ advertisements to a large number of telephone facsimile machines for a fee, maintain lists of facsimile numbers that they use to direct their clients’ advertisement^.^^' We noted that this practice, among others, indicates a fax broadcaster’s close involvement in sending unlawful fax advertisements and may subject such entities to enforcement action under the TCPA and our existing rules. We then sought comment on whether the Commission should address specifically in the rules the activities of fax broadca~ters.”~ Companies and organizations whose members hire fax broadcasters to transmit their messages argue that the fax broadcaster should be liable for violations of the TCPA’s faxing pr~hibition.~” AIADA maintains this should be the case, even if the fax broadcaster uses the list of fax numbers provided by the company doing the advertising.’16 Nextel argues that liability ought to lie with the party controlling the destination of the fax; that fax broadcasters who actively compile and market databases of fax numbers are the major perpetrators of TCPA fax violations.‘” Nextel

194.

TOPUC Comments at 6; see also Mathemaesthetics Reply Comments at 7 (operators of a trade show ignored request not to use fax number for advertising and began transmitting multi-page fax ads for services my business has no interest in). But see NADA Comments at 3 (in dciciding to become a member of a trade association, the member voluntarily seeks the benefit of the association’., services).

’I2 1995 Reconsideration Order, 10 FCC Rcd at 12408-’J9. para. 37; w x also Hunton & Williams Comments at 7 (recommends at opt-out mechanism for unsolicited faxes).

’I3 2W2 Norice, 17 FCC Rcd at 17483-84, para. 40.

714 2002 Norice , 17 FCC Rcd at 17483-84. para. 40.

AIADA Comments at 2; Nextel Comments at 40.

711

715

’I6 AIAJJA Comments at 2

717 Nextel Comments at 38; see also NAAG Comments at 32 (stating that fax broadcasters that maintain their own databases of fax numbers are the subject of the vast majority of consumer complaints and state enforcement (continued.. ..)

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specifically urges the Commission to find that companies whose products are advertised by independent retailers should not be liable for TCPA violations when they have no knowledge of such act ivi t ie~.~’~ Fax broadcasters disagree that they should be liable for unlawful faxes, maintaining that many of them do not exercise any editorial control or discretion over the content of the message^:'^ and do not provide the list of fax numbers to which the ads are transmitted.’” Many industry as well as consumer commenters agree that only those fax broadcasters who are closely involved in the transmission of the fax should be subject to liability.72’ Reed asserts that liability should rest with the entity on whose behalf a fax is sent; that fax broadcasters are not in a position to know firsthand whether, for example, an established business relationship exists between the company and consumer.722

195. The Commission’s rulings clearly indicate that a fax broadcaster’s exemption from liability is based on the type of activities it undertakes, and only exists “[iln the absence of ‘a high degree of involvement or actual notice of an illegal use and failure to take steps to prevent such transmission^."'^^^ The Commission believes that, based on the record and our own enforcement experience, addressing the activities of fax broadcasters will better inform both consumers and businesses about the prohibition on unsolicited fax advertising. The Commission has determined to amend the rules to explicitly state that a fax broadcaster will be liable for an unsolicited fax if there is a high degree of involvement or actual notice on the part of the broadcaster. The new rules provide that if the fax broadcaster supplies the fax numbers used to transmit the advertisement, the fax broadcaster will be liable for any unsolicited advertisement faxed to consumers and businesses without their prior express invitation or permission. We agree, however, that if the company whose products are advertised has supplied the list of fax numbers, that company is in the best position to ensure that recipients have consented to receive the faxes and should be liable for violations of the prohibition. Therefore, the fax broadcaster will not be responsible for the ads, in the absence of any other close involvement, such as determining the content of the faxed message.724 In such circumstances where both the fax (Continued from previous page) actions, and that fax broadcasters who determine the content of the advertisement or its destination should be held liable for unsolicited faxes).

Nextel Comments at 25,38-40 see also DIRECTV Comments at 3.9 (asking whether DIRECTV or its 718

independent contractors have the established business relationship with a consumer).

719 Xpedite Comments at 5-7; Globecomm Comments at 4-5: ADVAL Reply Comments at 3 (fax broadcasters never see the list of recipients or the faxed document, which i s often uploaded directly through the Internet); Xpedite Reply Comments at 3.8.

‘31 ADVAL Reply Comments at 3; Xpedite Reply Comments at 3

‘’I Xpedite Comments at 3-4: NAAG Comments at 32-33; NCL Comments at 6; ADVAL Comments at 3 (‘%ax carriers should not be penalized for traffic sent by third parties.”).

Reed Comments at 6.

1992 TCPA Order, 7 FCC Rcd at 8780, para. 54 (quoting Use of Common Carriers, 2 FCC Rcd 28 19,2820

722

723

(1987)).

A high degree of involvement might be demonstrated by a fax broadcaster’s role in reviewing and assessing the 724

content of a facsimile message.

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broadcaster and advertiser demonstrate a high degree of involvement, they may be held jointly and severally liable for violations of the unsolicited facsimile provisions. In adopting this rule, the Commission focuses on the nature of an entity’s activity rather than on any label that the entity may claim. We believe the rule will better inform the business community about the prohibition on unsolicited fax advertising and the liability that attaches to such faxing. And, i t will better serve consumers who are often confused about which party is responsible for unlawful fax advertising. For the same reasons, the new rules define “facsimile broadcaster” to mean a person or entity that transmits messages to telephone facsimile machines on behalf of another person or entity for a fee.‘”

196. Some commenters ask the Commission to clarify the extent of common carriers’ liability for the transmission of unsolicited faxes.’= Cox specifically urges the Commission to distinguish the obligations of fax broadcasters from “traditional common As noted above, the Commission has stated that “[iln the absence of ‘a high degree of involvement or actual notice of an illegal use and failure to take steps to prevent such transmissions,’ common carriers will not be held liable for the transmission of a prohibited facsimile me~sage.”~” We reiterate here that if a common carrier is merely providing the network over which a subscriber (a fax broadcaster or other individual, business, or entity) sends an unsolicited facsimile message, that common carrier will not be liable for the facsimile.

197. Nextel urges the Commission to clarify that section 217 of the Communications Act does not impose a higher level of liability on common carriers than on other entities for violations of the TCPA.’- Section 217 provides that ‘‘ [iln construing and enforcing the provisions of this Act, the act, omission, or failure of any officer, agent, or other person acting for or employed by any common carrier or user, acting within the scope of his employment, shall in every case be also deemed to be the act, omission, or failure of such carrier or user as well as that of the person.”730 The Commission declines to address the scope of section 217 in this rulemaking, which was not raised in the 2002 Norice or in subsequent notices in this proceeding.

3. Faxservers

The TCPA makes it unlawful for any person to use any telephone facsimile 198. machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine.731 The TCPA defines the term “telephone facsimile machine” to mean “equipment

See 47 C.F.R. $64.12OO(f)(4). 125

lZ6 Cox Comments at 12-19.

727 COX Comments at 13.

1992 TCPA Order, 7 FCC Rcd at 8780, para. 54 (quoting Use of Common Curriers, 2 FCC Rcd 2819,2820 728

( 1987)).

729 Nextel Comments at 40-41.

l’47 U.S.C. $217.

47 U.S.C. 5 227(b)(l)(C). 731

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which has the capacity (A) to transcribe text or images, or both, from paper into an electronic signal and to transmit that signal over a regular telephone line, or (B) to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper.’”’’ The Commission sought comment on any developing technologies, such as computerized fax servers, that might warrant revisiting these

199. Commenters who addressed this issue were divided on whether fax servers should be subject to the unsolicited facsimile provisions. Some industry representatives urged the Commission to clarify that the TCPA does not prohibit the transmission of unsolicited fax advertisements to fax servers and personal computers because these transmissions are not sent to a “telephone facsimile machine,” as defined in the statute.’% Nextel maintains that such faxes do not implicate the harms Congress sought to redress in the TCPA, as they are not reduced to paper and can be deleted from one’s inbox without being opened or examined.”’ Other commenters disagree, noting that there are other costs associated with faxes Sent to computers and fax servers.’36 They note that the TPCA only requires that the equipment have the cupaciry to transcribe text or messages onto paper?37 and that computer fax servers and personal computers have that capacity.

200. We conclude that faxes sent to personal computers equipped with, or attached to, modems and to computerized fax servers are subject to the TCPA’s prohibition on unsolicited faxes. However, we clarify that the prohibition does not extend to facsimile messages sent as email over the Internet. The record confirms that a conventional stand-alone telephone facsimile machine is just one device used for this purpose; that developing technologies permit one to send and receive facsimile messages in a myriad of ways. Today, a modem attached to a personal computer allows one to transmit and receive electronic documents as faxes. “Fax servers” enable multiple desktops to send and receive faxes from the same or shared telephony lines.’38

”* 47 U.S.C. 8 227(a)(2); this definition was incorporated in 8 64.1200(0(2) of the Commission’s rules.

2002 Notice, 17 FCC Rcd at 17482, para. 37, 133

734 See Nextel Comments at 31-32

Nextel Reply Comments at 4-5

Michael C. Worsham Comments at 2 0 James Suggs Comments at 1. Commenters also note that some commercial facsimile services transmit faxes to the recipients as email attachments. We emphasize that any rules the Commission adopts with respect to unsolicited facsimile advertisements would not extend to facsimile messages transmitted as email over the Internet. See definition of telephone facsimile machine at 47 U.S.C. 8 227(a)(2).

135

136

Autoflex Comments at 2; J. Greg Coontz Reply Comments at 11-15, 16-17. 731

738 See Kauffman Comments at 3. Although fax boards alone do not have the capability to transcribe text onto or from paper, the Commission nevertheless determined that fax modem boards, which enable personal computers to transmit messages to or receive messages from conventional facsimile machines or other computer fax boards, are the functional equivalent of telephone facsimile machines. See 1995 Reconsiderution Order. 10 FCC Rcd at 12404-06, paras. 28-30.


201. The TCPA’s definition of “telephone facsimile machine” broadly applies to any equipment that has the capacity to send or receive text or images. The purpose of the requirement that a “telephone facsimile machine” have the “capacity to transcribe text or images” is to ensure that the prohibition on unsolicited faxing not be circumvented. Congress could not have intended to allow easy circumvention of its prohibition when faxes are (intentionally or not) transmitted to personal computers and fax servers, rather than to traditional stand-alone facsimile machines. As the House Report accompanying the TCPA explained, “facsimile machines are designed to accept, process and print all messages which arrive over their dedicated lines. The fax advertiser takes advantage of this basic design by sending advertisements to available fax numbers, knowing that it will be received and printed by the recipient’s machine.”739 However, Congress also took account of the “interference, interruptions, and expense” resulting from junk faxes, emphasizing in the same Report that “[iln addition to the costs associated with the fax advertisements, when a facsimile machine is receiving a fax, it may require several minutes or more to process and print the advertisement. During that time, the fax machine is unable to process actual business communications.”’“

202. Facsimile messages sent to a computer or fax server may shift the advertising costs of paper and toner to the recipient, if they are printed. They may also tie up lines and printers so that the recipients’ requested faxes are not timely received.’“ Such faxes may increase labor costs for businesses, whose employees must monitor faxes to determine which ones are junk faxes and which are related to their company’s business. Finally, because a sender of a facsimile message has no way to determine whether it is being sent to a number associated with a stand-alone fax machine or to one associated with a personal computer or fax server, it would make little sense to apply different rules based on the device that ultimately received it.

4. Identification Requirements

The TCPA and Commission rules require that any message sent via a telephone 203. facsimile machine contain the date and time it is sent and an identification of the business, other entity, or individual sending the message and the telephone number of the sending machine or of such business, other entity, or individ~al.7~’ In the 2002 Norice, the Commission asked whether these rules have been effective at protecting consumers’ rights to enforce the TCPA.’43 The Commission determined in its 1997 Reconsiderdon Order that a facsimile broadcast service must ensure that the identifying information of the entity on whose behalf the provider sent messages appear on facsimile messages. In its discussion, the Commission clarified that the sender of a facsimile message is the creator of the content of the message, finding that Section

739 H.R. REP. No. 102-317 at 10 (1991).

740H.R. REP. NO. 102-317 at 25 (1991).

See Covingron & Burling v. International Marketing &Research, Inc. et al., No. 01-0004360 (D.C. Sup. Ct. 141

(April 16,2003) (finding a fax broadcaster liable under the TCPA for transmitting unsolicited fax advertisements to a law firm’s fax server).

14*47 U.S.C. 8 227(d)(l)(B); 47 C.F.R. 5 68.318(d)

2002 Notice, 17 FCC Rcd at 17483-84, paras. 37 and 40 743

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227(d)(l) of the TCPA mandates that a facsimile include the identification of the business, other entity, or individual creating or originating a facsimile message, and not the entity that transmits the me~sage.~” The Commission believes that if a fax broadcaster is responsible for the content of the message or for determining the destination of the message (k, supplying the list of facsimile numbers to which the faxes are sent), it should be identified on the facsimile, along with the entity whose products are adverti~ed.”~ Therefore, we amend the rules to require any fax broadcaster that demonstrates a high degree of involvement in the transmission of such facsimile message to be identified on the facsimile, along with the identification of the sender.746 This will permit consumers to hold fax broadcasters accountable for unlawful fax advertisements when there is a high degree of involvement on the part of the fax broadca~ter.~” Commenters suggested the Commission clarify what constitutes an adequate identification header.7” Consistent with our amended identification rules for telemarketing calls, senders of fax advertisements will be required under the new rules to use the name under which they are officially registered to conduct business.749 Use of a “d/b/a” (“doing business as”) or other more widely recognized name is permissible; however, the official identification of the business, as filed with state corporate registration offices or comparable regulatory entities, must be included, at a minimum.

XIV. PRIVATE RIGHT OF ACTION

A. Background

204. The TCPA is a unique statute in that it provides consumers with two private rights of action for violations of the TCPA rules: One provision permits a consumer to file suit immediately in state court if a caller violates the TCPA’s prohibitions on the use of automatic dialing systems, artificial or prerecorded voice messages, and unsolicited facsimile advertisement^.'^ A separate private right of action permits a consumer to file suit in state court if he or she has received more than one telephone call within any 12-month period by or on

I997 Reconsideration Order, 12 FCC Rcd at 4612-13. para. 6.

See NAAG Comments at 32-33 (stating that only requiring the advertiser’s identify has been a hindrance in enforcing the TCPA. It has been the states’ experience that fax broadcasters, who maintain their own databases and send others’ advertisements to these fax numbers. frequently omit their identifying information as the sender in order to avoid detection and enforcement action.).

See amended rule at 47 C.F.R. 5 68.318(d).

See supra discussion, paras. 194-195.

744

,

747

748 Michael C. Worsham Comments at 1 I- 12; NCL Comnents at 6, Michael J . Blitch Comments at 7 (both seller and fax broadcaster should be identified); NAAG at 33 (should require identifying information of fax broadcaster). But see Xpedite Reply Comments at 8 (requiring a fax broadcaster’s identifying information could confuse

consumers as to who created the message. Uninvolved fax broadcasters should not be required to identify themselves on faxes.).

749 See supra discussion on identification requirements for telemarketers, para. 144.

47 U.S.C. $227(b)(3). 750

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behalf of the same company in violation of the guidelines for making telephone solicitation^.^^' Based on inquiries received about the private right of action, the Commission asked whether we should clarify whether a consumer may tile suit after receiving one call from a telemarketer who, for example, fails to properly identify himself or makes a call outside the time of day re~trictions.7~~

205. Industry commenters argue that the statutory language is clear; that only a person who has received more than one telephone call that violates the telephone solicitation rules within any 12-month period may file suit under the TCPA‘s private right of a~tion.7~’ Consumers and consumer advocates were split on the issue. Some maintained that a consumer should be permitted to pursue a private right of action for a telemarketer’s first offense;’” others acknowledged that the statute does not permit a cause of action for the first time a telemarketer violates the telephone solicitation rules?55 Several industry commenters point out that they have been named as defendants in class action lawsuits under the TCPA in state courts.’56 They urge the Commission to determine that the TCPA’s private right of action does not contemplate or permit class action lawsuit^?^' Some consumer commenters and plaintiffs’ attorneys who have filed class action suits argue that foreclosing class actions would severely handicap the effectiveness of the TCPA and consumers’ ability to enforce its provisions. They also contend that the FCC is not authorized to interfere with state courts’ certification of class actions.’J8

B. Discussion

206. The Commission declines to make any determination about the specific contours of the TCPA’s private right of action. Congress provided consumers with a private right OP action, “if otherwise permitted by the laws or rules of court of a State.”lS9 This language suggests that Congress contemplated that such legal action was a matter for consumers to pursue in

lJ1 47 U.S.C. 5 227(c)(5).

lJ2 2002 Notice. 17 FCC Rcd at 17486-87. para. 47.

lS3 Mastercard Comments at 7; BMO Financial Comments at 4, Bank of America Comments at 6; DialAmerica Comments at 14; AT&T Wireless Reply Comments at 27-28,

Martin C. Kaplan Comments at 2 (acknowledging that “[ulp to one call per year is permitted . . . should be 154

amended to total prohibition”); April Jordon Comments at 2; Wayne G. Strang Reply Comments at 16: NCL Comments at 7.

155 NYSCPB Comments at 19; Michael C. Worsham Comments at 15 (Commission should clarify that once threshold of two calls received within one year is met all violations in any calls are actionable).

See DIRECTV Comments at 3-4; Nextel Comments at 39 156

15’ See, e.g., MA Comments at 2; MADA Comments at 2; Kauffman Comments at 8; DIRECTV Reply Comments at I: ABM Comments at 2.

lS8 See Hershovitz Reply Comments at I , 8-9; Wayne G. Strang Reply Comments at 4; see also City of New Orleans Comments at 11: Joe Shields Reply Comments at 9.

lS9 47 U.S.C. 5 227(c)(5).

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appropriate state courts, subject to those courts’ rules. The Commission believes it is for Congress, not the Commission, to either clarify or limit this right of action.

XV. INFORMAL COMPLAINT RULES

207. In the 2002 Notice, the Commission noted that it had released another Notice of Proposed Rulemalung in February of 2002, seeking comment on whether to extend the informal complaint rules to entities other than common carriers.’@ We sought comment in this proceeding on whether the Commission should amend these informal complaint rules to apply to telemarketers. We will review this issue as part of the Informal Complaints proceeding. All comments filed in this proceeding that address the applicability of the informal complaint rules to telemarketers will be incorporated into CI Docket No. 02-32.

XVI. TIME OF DAY RESTRICTIONS

208. Commission rules restrict telephone solicitations between the hours of 8:OO a.m. and 9:OO pm. local time at the called party’s location.16’ As part of our review of the TCPA rules, we sought comment on how effective these time restrictions have been at limiting objectionable solicitation calls.’” The Commission also asked whether more restrictive calling times could work in conjunction with a national registry to better protect consumers from telephone solicitations to which they object.

209. Industry members that commented on the calling time restrictions unanimously asserted that the current calling times should be retained.16’ Some explained that any restrictions on calls made during the early evening hours, in particular, would interfere with telemarketers’ ability to reach their customers?M Consumers. on the other hand, urged the Commission to adopt tighter restrictions on the times that telemarketers may call them. Some object to calls at the end of the day and during the dinner hour? others prefer that telemarketers not be able to begin

’@ 2002 Notice, 17 FCC Rcd at 1748687, para. 47. See generally Establishment of Rules Governing Procedures to Be Followed When lnformal Complainrs Are Filed by Consumers Against Entities Regulared by the Commission; Amendmenr ofsubpan E of Chaprer 1 of the Commission ‘S Rules Governing Procedures to Be Followed When Informal Complaints Are Filed Against Common Carriers; 2000 Biennral Review. Memorandum Opinion and Order and Notice of Proposed Rulemaking. CI Docket No. 02-32, CC Docket Nos. 94-93,00-175,17 FCC Rcd 3919 ( 2 W ) .

16’ 47 C.F.R. 0 ~ 1 2 ~ ) ( e ) ( l ) .

2002 Notice, 17 FCC Rcd at 17481-82, para. 36.

See. e.&, ATA Comments at 105; BMO Financial Comments at 5; HFS Comments at 9; Technion Comments at 163

7; AT&T Wireless Comments at 28.

Teleperfomance Comments at 2; ATA Comments at 106.

See, e.g., Melva L. Taylor Comments at 1; Michael C. Worsham Comments at 11; Robert Jaglowski Comments;

1M

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Linda M. Deakl Comments; Richard M. Bryant Comments.

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